Hourly Rate Calculator
Calculate what you should charge based on your income goals and expenses.
Your Target Hourly Rate:
$0.00
How to Calculate Your Hourly Rate
Determining your hourly rate is a critical step for freelancers, consultants, and contractors. Unlike a standard salary, your hourly rate must cover your take-home pay, business overhead, taxes, and non-billable time (like admin work or marketing).
The Hourly Rate Formula
To find your ideal rate, we use the following calculation:
Hourly Rate = (Desired Annual Income + Annual Business Expenses) / (Billable Hours per Week × Working Weeks per Year)
Factors to Consider
- Billable vs. Actual Hours: Remember that you likely won't spend all 40 hours of a work week on client work. Factor in 20-30% of your time for administrative tasks.
- Vacation and Sick Leave: There are 52 weeks in a year. If you want 4 weeks of time off, you should calculate based on 48 working weeks.
- Business Expenses: Include software subscriptions, hardware, office space, insurance, and professional services like accounting.
- Taxes: As a self-employed individual, you are responsible for both the employer and employee portions of social security and Medicare, plus income tax.
Example Calculation
If you want to earn $70,000 a year, have $10,000 in annual expenses, and plan to work 30 billable hours per week for 48 weeks a year:
- Total Revenue Needed: $80,000
- Total Billable Hours: 1,440 (30 hours × 48 weeks)
- Hourly Rate: $55.56 per hour